Outputs

Horizon 2020 FAQ

Administrative, financial and legal questions resulting from the provisions of the Model Grant Agreement / Consortium Agreement in Horizon 2020

This FAQ is based on the information included in the AGA: Version 5.0, July 3, 2018.

Disclaimer: The answers are drafted by members of the COST Action BESTPRAC based on their understanding and experience as a help to colleagues, but they do not substitute official interpretations by the EC. For other questions please consult also the official FAQ of the European Commission: ec.europa.eu/research/participants/portal/desktop/en/support/faq.html

Personnel costs

How to calculate personnel costs in the following situation: A PostDoc researcher is employed part-time...

A PostDoc researcher is employed part-time on the project and is receiving a salary laid out in his contract. At reporting time, if we calculate his personnel cost by any of the three possible ways laid out in the Grant Agreement, the numbers will not match, because we need to take a closed financial year as a basis. Our institution chooses to use the 1720 working hours/year calculation method (after careful consideration of all three methods), which works well for long-term full-time employees, but it poses problems in the following:

Case A: PostDoc researcher 1 is a case when the actual working hours are higher than the productive hours based on the 1720 method

Case B: PostDoc researcher 2 is a combined case when the actual working hours are lower than the productive hours based on the 1720 method - due to days off; additionally, last year’s lower hourly rate is used.

Of course we will not claim more money than this employee is costing the project and we will sit down and recalculate the same case using the other two methods (institutional average working hours, exact working hours for the employee). How should we deal with this?

Answer:

This question is in fact many questions .In the comment to article 6.2.A.1 in the AGA (Version 5; 3 July 2018) and the “Double ceiling rule”— Beneficiaries must ensure that:

the total number of hours worked declared in EU and Euratom grants for a person for a year is NOT higher than the number of annual productive hours used for the calculation of the hourly rate

the total amount of personnel costs declared (for reimbursement as actual costs) in EU and Euratom grants for a person for a year is NOT higher than the total personnel costs recorded in the beneficiary’s accounts (for that person for that year)

Case A: Of course, in projects, researchers never work exactly the same number of hours as the fixed number of annual productive hours (1720) or alternatively the standard annual number of productive hours. Some researchers work more and some less. Therefore, in the presented case where the method of 1720 annual productive hours is chosen, if the researcher works more than 1720 hours, only 1720 workable hours can be charged to the project. If the researcher works less than 1720 hours, the beneficiary can charge the actual number of hours.

Case B: It should be noted that in case b, the calculated hourly rate based on 1720 productive hours is lower than the actual hourly rate. The difference between the real costs incurred and the reported costs must be covered by the beneficiary.

Additionally, in this case you can take in to the consideration that the revised model grant agreement V 3.0 added the possibility to use the hourly rate “per month” which is based on the actual monthly salary costs (instead of the last closed financial year). According to article 6.2 A of AGA (page 64) this calculation method can only be applied with the method:

o 1720 hours for person working full time (monthly hours: 1720 / 12 )

o the standard number of annual hours (monthly: standard number / 12)

This option may be applied retroactively for all grants on-going (i.e. for which the final report has not been submitted) on 20 July 2016.

Additionally, It should be noted that a beneficiary cannot change the model for the calculation of the hourly rate “ad hoc”, but it can use a different methods for “similar categories of staff” (e.g. type of contract). The “model 3”, which is based on standard annual productive hours, can therefore only be used if standard hours are already established as normal practice in the institution. (Refer to the summary table in the AMGA, Chapter 3. Article 6.2.A.1)

Answer:

In the comment to article 6.2.A.1 in the AGA (Version 5; 3 July 2018) additional remuneration is the financial amount (cost of work) paid to the employee in addition to his/her standard salary. This additional remuneration is paid under certain criteria, which must be auditable. It is an eligible cost only for non-profit organisations (as per Article 2.1(14) of the Rules for Participation Regulation No 1290/2013) under the following conditions:

Part of the beneficiary’s usual remuneration practices;

Paid in a consistent manner whenever the same kind of work or expertise is required;

Paid for the performance of additional work or different expertise than usual tasks;

Applied by the beneficiary, regardless of the source of funding used;

Additional remuneration is eligible up to the following amounts:

If the person works full time and exclusively on the project, during the full year: up to €8000

If the person works exclusively on the project but not full time or not for the full year: up to the corresponding pro-rata of €8000

If the person does not work exclusively on the project: up to a pro-rata of the €8000 calculated as follows:(8000€/ the number of annual productive hours) x the number of hours that the person has worked on the project during the year

Additionally, please take in to the consideration following:

If additional remuneration is paid to staff only for working in Horizon2020 projects and not for work on any other non-national projects, it will not be eligible

Additional remuneration is added to costs declared and should not be used in hourly rate calculation. It means, Project budget = (Hourly rate * hours worked on the action) + additional remuneration.

Additional remuneration is in practice an issue ONLY for case 1B beneficiaries (How to calculate direct personnel costs for employees (or equivalent) according to AGA Version 5; 3 July 2018, page 54). All other beneficiaries will automatically fall under ‘basic remuneration only’ and therefore are not concerned by the provisions on additional remuneration.

Personnel cost: Can each beneficiary use the annual productive hours of the organization even though these can be less than that of the average set by the Commission?

Answer:

Yes, this is possible, as long as it is in accordance with the usual accounting practices of the beneficiary. But, if there is no applicable reference for the standard annual workable hours, this option cannot be used. Anyway, the “standard annual productive hours” must be at least 90% of the “standard annual workable hours”.

For example: In France, 1607 annual workable hours are prescribed by national law. Therefore, the annual productive hours used for the calculation of the hourly rate cannot be less than 1446 h/year (90% of 1607 hours). Every institute should include this in its internal regulations. If a beneficiary deduces “average sick leave” or “general non-productive time” from the workable hours to have low standard hours and thus higher hourly rates, it has to check the 90% rule.

Second example: In Belgium, “standard annual productive hours” can be calculated on the following way: annual workable hours (contractual 38h/week) – holidays – annual leave – average sick days of the last 3 years. But, at the end 90% rule have to be cheeked.

Timesheets: What are the details that are to be requested by the EC in timesheets as regards the different activities a person may have?

Answer:

Time sheets should include, as a minimum:

a. the title and number of the action, as specified in the GA

b. the beneficiary’s full name, as specified in the GA

c. the full name, date and signature of the person working for the action

d. the number of hours worked for the action in the period covered by the time record

e. the supervisor’s full name and signature

f. a reference to the action tasks or work packages of Annex 1, to which the person has contributed in the reported working hours.

Information included in time-sheets must match records of annual leave, sick leave, other leaves and work-related travel. In other words: hours declared by researchers for Horizon 2020 projects during their holidays cannot be charged to the project.

A template for time-sheets is available. (This template is not mandatory; beneficiaries may use their own model, provided that it fulfills the minimum conditions and it contains at least the information detailed above.)

If time records are not reliable, the Commission/Agency may exceptionally accept alternative evidence if it proves the number of hours worked on the action with a similar (or at least satisfactory) level of assurance (assessed against generally-accepted audit standards).

Recording other activities (like teaching) that are not necessary for the European project(s) is not required for Horizon 2020, unless the hourly rate is calculated based on individual productive hours. It is best practice if a person works for more than one European project, to record in one single timesheet all projects, to show that the same hours have not been declared for another project.

Increase of person-months (PMs): To what extent can the PMs be increased for one partner (keeping the same activities) within the same estimated budget?

Answer:

PMs are an indicative value of the effort planned for a task. The AGA does not define to what extent the PMs can be increased, and according to the AGA, generally an increase or decrease of PMs does not require amendment on the Grant Agreement. However, if PMs substantially deviate from the Annex 1, it is strongly recommended that the Principal Investigator notifies the Coordinator and the Project Officer (PO), providing justification for the deviation of PMs and ask to receive a written approval/confirmation from the PO (for e.g. possible EU audits after the project). This is particularly important when the increase of PM is necessary because of unexpected technical difficulties implementing the project, which could hamper their execution. A case that can simply be explained in the period reports is that of senior staff (professors) who had not budgeted their time for the project, but who declare their PM as effort in the activity report (without charging their hours to the project).

Increase of person-months (PMs): When the actual hours claimed on the tasks are performed by "cheaper" staff than anticipated in the budget and therefore more PM can be claimed without exceeding the initial budget

Answer:

That depends on the PO and his/her position should be sought and recorded.

Increase of person-months (PMs): What should be considered "substantially deviation" from the Annex 1...

Increase of person-months (PMs): What should be considered "substantially deviation" from the Annex 1 in which case is strongly recommended that the Principal Investigator notifies the Coordinator and the Project Officer (PO), providing justification for the deviation of PMs?

Answer:

There is no definition in AGA (Version 5; 3 July 2018). Position of some auditors and projects officers are that 30% would be reasonable. Others are ready to accept up to 20% as acceptable deviation from Annex1. According to this experience, we would recommend always clarifying this with the Project Officer at the EC and ask to receive a written approval/confirmation from the PO (for e.g. possible EU audits after the project).

The AGA now states that basic remuneration of employees can be up to the beneficiary's usual remuneration practice for national projects. Does this mean it can be higher than calculated based on the regular calculation methods?

Answer:

No. The revised AGA (version 5; 3 July 2018) states that Basic remuneration for case 1B beneficiaries (actual costs, project-based remuneration) covers the payments for the employee's participation in the project with the maximum in accordance with the beneficiary’s usual remuneration practices for national projects (which are either set by law or by internal rules).

To calculate remuneration:

The beneficiary must first calculate the so-called action reference, which is the hourly rate the employee earned for working on the project.

The beneficiary must then calculate the so-called national project reference, which is the hourly rate which the employee can earn for working on a national project based on a national or internal rule. (Please note that the national project reference MUST have been actually paid at least once before the submission of the H2020 proposal for work in a national project! Otherwise it cannot be used.)

If the action reference is higher than the national project reference, the exceeding part is additional remuneration. If the action reference is equal or lower than the national project reference, there is no additional remuneration; the remuneration paid to the employee is all basic remuneration.

Additionally, please take in to the consideration following:

Basic remuneration (salary costs) comes from the books of the beneficiary.

A calculation is necessary to obtain the hourly rate which is then to be multiplied with the hours worked for the project.

What is the difference between project-based remuneration and non-project-based remuneration?

Answer:

Project based remuneration is when an employee’s remuneration depends on whether he/she works on specific projects or not. Non-project based remuneration is when an employee is paid the same remuneration regardless of whether he/she is involved in specific projects or not.

The wizard should help beneficiaries through different steps and options to report on personnel costs. At the end of the process, the field in the financial statement will be filled automatically with the amount calculated.

How to use wizard: At first, you select the method of calculation of the hourly rate. Then you are required to enter the details per person (employee) that are needed for the selected method. For the method based on monthly hourly rates each month has to be entered separately.

When filling in the financial report, there is a “wizard stick” icon next to Personnel costs window. The basic information about the project is automatically filled in. Beneficiary can choose between calculation “per full financial year” or “per month”. Then Persons working on the action are to be added. The system asks for information:

Then the system adds the person on the project, in our case it offered two options: an hourly rate calculation for year 2017 and an hourly rate calculation for 2018. You choose one option and new window appears, asking for (depends on the method of calculation used):

Is full-time job) Yes / No If not, % of part time job? Standard annual workable hours of the financial year Standard annual productive hours according to the beneficiary’s methodology >90% à Yes / No (calculated automatically) Annual productive hours (calculated automatically)

Annual personnel cost (in €) Annual hourly rate (calculated automatically) Hours worked in the H2020 action during the year falling in the reporting period Has the person declared hours in other EU/Euratom grants in the year or in other reporting periods of this grant? Yes / No If yes how many? Hours eligible (calculated automatically) Theoretical personnel costs (calculated automatically) Has the person declared personnel costs for this year in other EU/Euratom grants or other reporting periods of this grant? Yes / No If yes how much? In €) Total eligible personnel costs (calculated automatically)

Timesheets: Is it necessary to show in timesheets 1720 productive hours...

Is it necessary to show in timesheets 1720 productive hours per year for each person who is involved in the project (for persons who are working full time in my institution)? Our institution uses Option 1: 1720 fixed hours to calculate the hourly rate.

Answer:

No. If you use the 1720 option there is no need to actually have 1720 productive hours in your timesheets. The timesheet shall indicate the hours that have been worked on the project on the given day (or week) in an auditable way. If the researchers worked more than 1720 hours on the project, the timesheets will indicate more hours. If they worked less, the lower figure will appear. In case of an EC audit, the auditors may ask to see evidence for the declared hours on a given day. If the auditors are not convinced that the time recording is reliable, they may require alternative evidence.

1720 is a fixed number used to calculate your hourly rate; your actual productive hours in the timesheets are used to calculate the total personnel cost to claim.

Other direct costs

Depreciation of equipment

The AGA states that the beneficiaries may normally only charge the annual depreciation costs that correspond to the part of the equipment’s use for the action. (Version 5.0 3 July 2018; Note: 1.1.4 Full price of an asset in one single year, page 81). If the beneficiary bought the equipment during the action of two years and used it from that point to the end of the action 100% for the action how to calculate the depreciation cost per each reporting period?

Answer:

The beneficiary should calculate the depreciation cost per reporting period taking into account only the period of equipment usage for the action.

Practical example:

The beneficiary bought a server for EUR 3.000 excluding VAT (total amount including VAT is 3600 euro) in February 2017 for the project which started in January 2017. The server is used for the project 100% of the time from 1 March 2017 until the end of the project in December 2018. The server’s useful life (period of depreciation) is two years (according to the beneficiary’s usual practices), but it has been used for the project for 22 months. The beneficiary uses a linear depreciation (every year the same amount).

In the reporting period ending in June 2017, the beneficiary must declare depreciation costs taking into account the time used for the project and the server’s useful life

Equipment: Can the beneficiary’s own equipment be an eligible cost (depreciation and service costs)? How will this be claimed?

Answer:

It is allowed to charge the use of beneficiary’s own equipment on the project, provided that the depreciation period has not been completed yet and that only the recorded use for the project is claimed. However, it is not always easy to define the “rate of actual use for the project” of use of equipment for a project. Some organizations have a standardized system for monitoring the usage of equipment (“time sheet for equipment"). Alternatively, the costs are often covered by the beneficiary.

The actual use should be directly measured and the amount of use (percentage and time used) must be auditable.

The idea of full capacity was removed from the AMGA (only applicable for Large Research Infrastructure). So if the beneficiary does not use the equipment exclusively for the action, only the portion used on the action may be charged.

Practical example:

Annual depreciation of the equipment is 17.200 €

Under normal circumstances the equipment can be used 1.720 hours per year

However the equipment is actually used only 100 hours per year

Out of which, for the EU action, it was used (according to the records) for 50 hours.

Eligibility of equipment maintenance costs: Is maintenance of scientific equipment which is not used exclusively for the action eligible (for e.g.: old equipment already bought before the project that needs small parts to be changed + calibration

Answer:

Equipment maintenance costs are usually eligible, if acknowledged in accounting books and reflect existing state. Following criteria need to be fulfilled:

Such costs are recorded as direct costs in the year of occurrence also in accounting books (not recorded as an asset)

Such costs incurred for the duration of the action (some supporting evidence might be welcome e.g. log books)

Difference between existing and new equipment is not evident. Costs that are not directly linked to the project (e.g. maintenance would be necessary irrespectively of who is using the equipment for what purpose) are not eligible.

Additionally, if the equipment is not used exclusively for the action this costs can easily divert from direct to indirect cost if no special rules are valid.

“Full cost” option (reimbursement) is given in AGA, although limited only for “JET” projects (through equipment costs). Parallel full cost option is foreseen for large research infrastructure (through capitalized and operating costs of large research infrastructure), but again with certain limitations.

Eligibility of equipment maintenance costs: If maintenance of scientific equipment is eligible shall it be charged as other goods and services or equipment costs?

Answer:

Equipment maintenance costs are eligible if they are not covered by overhead costs according to the usual accounting practices and if they are purchased together with the durable equipment. In this case they can be charged as equipment costs according to AGA Art. 6.2.D.2 1.1.1

1.1.1 What? This budget category covers the depreciation costs of equipment, infrastructure or other assets used for the action.

In some cases (e.g. infrastructure), equipment costs may also include the costs necessary to ensure that the asset is in good condition for its intended use (e.g. site preparation, delivery and handling, installation, etc.).

What not? If the beneficiary’s usual practice is to consider durable equipment costs (or some of them) as indirect costs, these can NOT be declared as direct costs, but are covered by the 25 % flat rate for indirect costs (see Article 6.2.E). Any depreciation declared as a direct cost under a H2020 action must be a direct cost under the beneficiary’s cost accounting practices (see Article 6.2.)

If service contracts are not purchased together with the durable equipment, they should be charged under „other goods and services“ if they follow the general conditions to be eligible set in Art. 6.1.

Eligibility of computer costs: Are computers bought for hired staff considered as indirect costs (as in FP7 most of the time but subject to Project Officer interpretation) or are they eligible as direct costs?

Answer:

Discussions about IT Equipment (e.g. desktop computer, Laptops, etc.) should take place at the proposal stage, when the budgets are being finalized. IT equipment is treated the same as in FP7. These are normally costs which should be covered by beneficiary, except for specific circumstances whereby this equipment can be fully justified to the PO to be vital for the completion of the project.

Examples:

Individual computers cannot be charged to a project for their total cost, but per their usage and depreciation rates (Version 5.0 - 3 July 2018, page 88 and 689).

Use of supercomputers owned by an institution can be internally charged to the project (costs for goods and services which the beneficiary itself produced or provided for the action), if charging the use of a specific research device is something that the institution does for other users. For such a charge to be eligible, a project needs to provide the supercomputer usage rate, costs calculation and confirmation that the same charge is applied to other users (Version 5.0 - 3 July 2018, page 98).

The costs of renting or leasing specific computers (including related duties, taxes and charges such as non-deductible value added tax (VAT) paid by the beneficiary) are also eligible, if they do not exceed the depreciation costs of similar equipment and do not include any financing fees (Version 5.0 - 3 July 2018, page 83 and 615).

The costs of specific computers contributed in-kind against payment are eligible, if they do not exceed the depreciation costs of similar equipment, do not include any financing fees and if the conditions in Article 11.1 are met (Version 5.0 - 3 July 2018, page 646).

Eligibility of travel costs in case of combination with personal travel and travels for other purposes: How to justify such travel costs and in what amount?

Answer:

First, travel costs should meet the following criteria: “it is the usual practice of the beneficiary to pay for such travels (e.g. travels for combining professional and personal reasons)” and “it has been an actual cost for the beneficiary” (page 78, Version 5.0 – 3 July 2018). For the accurate eligible amount, a beneficiary must keep evidence of basic travel costs (“Record keeping – The beneficiary must keep evidence, not only of the actual cost of the return flight, but also of the cost of the flight that the person would have taken if he/she would have returned directly after the end of the work for the action”, page 78, Version 5.0 – 3 July 2018).

Answer:

Must fulfill the eligibility conditions set out in Article 6.1 and 6.2”. and

MUST be calculated as unit costs (see Art. 5.2(d)) - as separate line in the financial statement

The costs used for the calculation of the units must follow the general eligibility criteria, be in line with the usual accounting principles of the beneficiary based on verifiable and objective criteria in a consistent manner. Ineligible cost elements need to be removed even if they are used in the usual practice of the beneficiary. Only costs directly linked to the internally invoiced goods and services are allowed. If a cost item is not exclusively used for these goods and services, only the share used for them may be counted

This leads to problems, especially at universities, when it is not possible for the beneficiary to calculate the actual costs, or when the calculation and/or presentation of the actual costs cause an internal effort that is too big to justify the benefits of charging these costs to the project. For more information, please refer to the BESTPRAC WG2Guide to Best Practice – Financial Issues.

Full payment of allocated living/mobility/family allowances in Marie- Sklodowska-Curie Actions

There are many budget items within a salary (e.g. social security, contingencies, settlement etc.) and these items shall be all paid to the researcher in order to obtain a match with the amount allocated to the researcher in the Annex II of the grant agreement regarding the living allowance, mobility allowance and family allowance. It would be useful to know examples from different countries on how all budget items of a salary are paid to the researcher so that at the end of the employment contract all the allocated amount have been transferred to the researcher (i.e. avoid any underpayment). It would also be useful to know how to deal with all the budget items adjustments when the researcher leaves before the end date of the employment contract.

Answer:

A general answer is not possible, because the regulations vary from country to country, and regional employment contracts have to be followed. Compared to national salary regulations for PhD students, the allowances do and do not cover the actual salary costs. For instance, there is no underpayment issue in Cyprus, while for PhD students in the Netherlands the 4th mandatory and most expensive year is to be covered by additional sources, and the allowances are lower than the regular PhD salary in Norway. In some countries salaries rise during the project duration according to union contract agreements, in others not, because they are fixed. The gap between the funding and the amount of the salary has to be covered by the institute.

Another problem is that PhDs usually take 4 years, but the project's runtime is only for 3 years. In Belgium, a fellow has no guarantee to be employed till in year 4, it depends on the professor. In the Netherlands, he/she is guaranteed to be paid for 4 years. In some countries, the candidate is employed as a researcher in the last year, not as a PhD, which might help with some regulations like timely limited contracts or amounts to be paid.

Mostly the allowances are combined into one salary, except for mobility allowances. If some money out of the mobility allowance is left at the end, it is then paid to the researcher. This could be tax free in some states, or taxed in other countries. In Norway, only Living Allowance (LA) and Mobility allowance (MA) are paid together, while Family allowance

(FA) is paid on top of the salary, nothing is tax free. In Belgium, LA and part of the MA are paid as fellowship. The remainder of the MA is paid (tax-free) to the fellow. If there is a remainder at the end of the contract, this will also be paid to the fellow.

Contracts/amounts might also vary in a single institution, somebody might, for example, get more money for commuter tickets, because he/she is living far away, while another employee gets less money.

If a researcher leaves before the end of the action, he/she has to give at least 1 month notice. This should be enough time to settle remaining funds to either side. A shift of the remaining budget to another country might impose difficulties, because the money left might equal 12 months of payment in one country and only 10 in another country.

Recommendation: To explain all regulations, insurances, social security etc. very clearly and from the beginning to the fellow, in order to avoid misunderstandings or wrong assumptions. The fellows should be sent to the HR or finance department and have everything explained. Researchers should also stay in contact with finances/HR due to the fact that, as the payment might vary, it is important for them to know if the funding is enough or not.

MSCA IF: The unit costs are divided into two groups: researcher unit costs and institutional unit costs. Our researcher receives a MSCA IF grant and is going to the USA for two years...

MSCA IF: The unit costs are divided into two groups: researcher unit costs and institutional unit costs. Our researcher receives a MSCA IF grant and is going to the USA for two years. How overhead should be divided? Who should receive the overhead? When reporting the costs that have been made, it is stated in the AGA: The beneficiary must keep adequate records and other supporting documentation to prove the number of units declared and that the costs for the recruited researcher (living allowance, mobility allowance, family allowance) have been fully incurred for the benefit of the researcher. One unit is defined as one person-month. The funding is also calculated on the fixed unit costs. If for any reason, the training and networking costs were not fully used, can it be used for other months or is shifting costs possible?

Answer:

The receiving partner in the EU gets the overhead. If the fellow is then seconded to another institute/country, you need to negotiate in every case. The overhead might be at least partly transferred to the institute where the fellow is seconded, but there is no fixed rule. Some universities also send bills for the amount of overhead.

If funding is left, local rules should be followed. In some countries, the remaining funding can be used e.g. for salaries, while in other countries this is not possible. It is important to note that tuition fees are eligible costs in MSCA. In any case the beneficiary is not required to reimburse unused parts of the accepted amounts received to the European Commission.

MSCA IF: Our researcher receives a MSCA IF grant and is going to the USA for two years. Supporting documentation to prove the number of units declared and that the costs for the recruited researcher will be in USD...

MSCA IF: Our researcher receives a MSCA IF grant and is going to the USA for two years. Supporting documentation to prove the number of units declared and that the costs for the recruited researcher will be in USD. What currency should use when reporting: USD of EUR?

Answer:

With respect to reporting, the currency always has to be Euro (see also question 22), but this question is irrelevant for MSCA actions as you will only be required to report the number of units (months of employment of the fellow).

Currency exchange rate: How is the currency exchange rate calculated at institutional level?

Currency exchange rate: How is the currency exchange rate calculated at institutional level? The exchange rate fluctuates and is different the one when the money is received from the one when the expenses are performed and from the one when the expenses are justified.

Answer:

Every organization, with accounting established in a currency other than the euro, should have one base currency so-called conservative exchange rate. A conservative exchange rate is used for budgeting in the proposal stage. This helps with exchange rate losses which are managed better.

But, in the comment to article 20.6 in the AGA (Version 5; 3 July 2018) in implementation stage, beneficiaries and linked third parties with accounting established in a currency other than the euro must convert the project costs recorded in their accounts into euro at the average of the daily exchange rates published in the C series of the Official Journal of the European Union, (http://www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html) calculated over the corresponding reporting period.

Currency exchange rate: If no daily euro exchange rate is published in the Official Journal of the EU, how to convert the project costs recorded?

Answer:

In the comment to article 20.6 in the AGA (Version 5; 3 July 2018) beneficiaries with accounting established in a currency other than the euro must convert the costs recorded on the project into euro at the average of the monthly accounting rates published on the Commission’s website calculated over the corresponding reporting period.

Example: A H2020 project was started at January 2017. The beneficiary has accounting in RSD (Serbian Dinar). The first reporting period (RP1) is ending in June 2017.

Budget modification: Within what limits can the beneficiary modify the budget unilaterally and within which budget categories?

Answer:

It is advised that the Project Officer is contacted for any significant budget modifications. A partner can modify its own budget (or shift budgets between beneficiaries) without official Amendment from the Commission as long as the work described in Annex 1 is completed.

Example:

• If one beneficiary has no budget for equipment, it can allocate budget for equipment without permission from the Commission.

• Unit costs can be converted to actual costs as long as the unit costs are higher than actual costs.

• But, Subcontracting should normally be indicated in Annex 1. If you wish to report subcontracting while it was not foreseen, it is strongly recommended to contact the PO and ask for an amendment.

In other words, for any changes in Annex 1 like adding Subcontracting costs or Third parties that imply change in beneficiary’s budget should be asked for an official amendment on the GA. It is highly recommended / advised to contact the Project Officer upfront to avoid rejection of costs.

In-kind contribution: What is meant by in-kind contribution and when it can be accepted? What are examples of in-kind contribution that can be claimed?

Answer:

“In-kind” contribution can be defined as a contribution of your own resources but not in the form of money.

A beneficiary can receive in-kind resources from a third party free of charge or against payment and in the same way, your institution can provide in-kind contributions for another institution (beneficiary in an EC project) free of charge or receiving money for it.

When a beneficiary receives in-kind resources these can be declared as eligible costs if these contributions fulfill general conditions for costs to be eligible (article 6 of the AGA, Version 5.0 – 3 July 2018). Normally means workable hours or use of equipment or infrastructures.

Examples of in-kind contributions:

Benefits in-kind associated to direct personnel costs: costs of benefits in-kind provided by the beneficiary to its personnel (e.g. costs of a company car made available to certain categories of employees for their own use) or of benefits equivalent to financial ones (e.g. costs of lunch vouchers) may be accepted as eligible if they are justified and registered as personnel costs in conformity with the beneficiary’s usual remuneration practices.

Costs related to public officials (associated to direct personnel costs): for public bodies, the costs related to public officials paid directly from central, regional or local government budgets may be considered eligible, if they fulfill the conditions set out in Article 6. In this case, the public officials will be considered as in-kind contributions provided by a third party (the government) free of charge (see Article 12).

Free use of equipment. To be claimed we must distinguish in-kind contributions free of charge from “in-kind contributions against payment” (articles 11 and 12 of the AGA, Version 5.0 – 3 July 2018). In addition, in-kind contributions provided free of charge, if they have been declared as eligible costs (i.e. not money, but an in-kind contribution free of charge given by a third party (a donor) specifically for being used for the action covered by the GA) are considered as “receipts”.

Permanent staff of a beneficiary which working on a project but already on the payroll of the organization is at some funding schemes (mainly national ones) also called “in-kind contributions”. In H2020 these costs are eligible as regular personal costs and are budgeted and reported following the rules defined in Art. 6, section A of the AGA, Version 5.0 – 3 July 2018.

As additional examples to clarify definition of “in-kind” often in projects funded by other DG’s different from DG Research it is required to provide up to 40% of total costs as in kind contribution. This “in-kind contribution” can be justified for instance by personnel working hours dedicated to the project and recorded by timesheets.

In addition, in the JTI IMI the contribution from companies participating in the project is always and only through in-kind contribution. They cover this in-kind contribution with workable hours or available infrastructures or equipment that they make available and measurable. They do prepare even financial statements with these costs without claiming any financial contribution from IMI.